Performance Audit of Kentucky’s See the audit report for Full Details |
Crit Luallen |
|
(Frankfort - September 7, 2007)
State Auditor Crit Luallen released today a performance audit of Kentucky’s High-Tech Construction Pool and High-Tech Investment Pool. Both funds are administered by the Department of Commercialization and Innovation within the Cabinet for Economic Development. The pools, established during the 2000 legislative session as part of a New Economy initiative, are used to help high-tech and knowledge-based businesses get started and become successful in Kentucky. Through April 2007, over $104 million has been approved for use in 97 different projects.
The audit, which included a sample review of 25 projects, found that overall the staff and director of the Department of Commercialization and Innovations are funding quality projects and making investments as intended by law. However, the agency needs to provide greater transparency and accountability. The report found that a Commission established to help monitor the effectiveness of New Economy programs has not met since 2003. “Many of the new jobs being created are in high-tech, knowledge-based companies. In order for Kentucky to compete in the new global market, initiatives like this must be successful. It is good to see that Kentucky is spending money to create and incubate these businesses, but we must provide greater transparency and improve accountability to ensure that we continue to grow in this critical area,” State Auditor Crit Luallen said. Despite Kentucky’s efforts, the state fell three spots to 45th in the 2007 State New Economy Index. In a separate report, the American Electronics Association, ranked Kentucky 28th in high-tech employment, yet 42nd in high-tech wages. Five recommendations were offered to make this New Economy initiative more transparent and accountable. At present, no regulations or formal written guidelines exist to document the criteria and processes used in administering the program. K.R.S. 154.12-278 is the only written guideline for the pools and its only requirement is that the Commissioner of the Department of Commercialization and Innovation recommend projects for funding and that the Kentucky Economic Development Finance Authority will have final approval. In addition, the annual reports produced by the Department offer no detail on the effectiveness of the funded projects nor do they demonstrate how the projects benefit the state. The Authority also does not produce statutorily required annual reports. The General Assembly created the pools in the Kentucky Innovation Act. That act also created the Kentucky Innovation Commission requiring it to meet quarterly. It was designed to help guide the state in the creation of New Economy jobs. It was also responsible for consolidating the information compiled and reported by agencies administering New Economy programs and to evaluate that information to determine their effectiveness. This Commission, which includes the Governor, Speaker of the House, and President of the Senate, has not met in four years. The report recommends the Governor’s Office appoint members and convene the Commission. The General Assembly should review the purpose, duties, and composition of the Commission to determine if the law needs to be revised. |
|
|
|